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The Room has been ranked with Plan 9 From Outer Space as a strong contender for the “best” worst movie ever made — and it’s now available in its entirety on YouTube. Written, directed, and starring Tommy Wiseau, The Room belongs in the same category as Plan 9, and Coven (which was immortalized in the 1999 documentary American Movie) as a paean to moviemaking by people who have no idea how to make a movie. The combination of passion and ineptitude is what made The Room a cult classic after its release, and what made The Disaster Artist — the James Franco film it inspired so compelling (Ed Wood, the biopic from Tim Burton about the director behind Plan 9 is also amazing). Writer, actor, and director Tommy Wiseau in a still from “The Room” In “The Room” Wiseau plays Johnny, an investment banker caught in a bizarre love triangle with his best friend, Mark, played by Greg Sestero, and his fiancee, Lisa, played by Juliette Danielle. It was Sestero’s book on the making of the film, “The Disaster Artist”, that inspired the eponymous movie directed by Franco and starring his brother Dave and Seth Rogen. According to The Daily Dot, Sestero and Wiseau are now promoting a straight-to-digital follow-up to their feature debut — a two-part black comedy called “Best F(r)iends”. Viewers might just be better off watching the original contender for best worst movies, Plan 9, which is also available on YouTube (and below).  

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Comcast has outbid Twenty-First Century Fox for the UK’s Sky, a final step in what’s been a years-long takeover battle between the two media conglomerates. Comcast’s final offer gives Sky a roughly $39 billion price tag. The acquisition of Sky, which has 23 million subscribers in the UK, Ireland, Germany, Austria and Italy, will give Comcast a much stronger foothold in the international market and much-needed ammo to compete with Amazon and Netflix in the streaming wars. Both companies upped their offers for Sky at the settlement auction Saturday, with Comcast offering £17.28 per Sky ordinary share and Fox offering £15.67 per share. Comcast initially priced Sky’s shares at £14.75 apiece. Fox’s original offer was £14 per share. Both companies will reveal their revised bids on Monday. Sky’s board will make its official recommendation by October 11. Sky operates several brands including Sky News, Sky Sports and Sky Cinema. Comcast drops its pursuit of Fox, making way for Disney acquisition

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Jason Rowley Contributor Jason Rowley is a venture capital and technology reporter for Crunchbase News. More posts by this contributor In VC fund creation, have we passed the peak? Supergiant VC rounds aren’t just raised in China Many corporations are pinning their futures on their venture investment portfolios. If you can’t beat startups at the innovation game, go into business with them as financial partners. Though many technology companies have robust venture investment initiatives—Alphabet’s venture funding universe and Intel Capital’s prolific approach to startup investment come to mind—other corporations are just now doubling down on venture investments. Over the past several months, several big corporations committed additional capital to corporate investments. For example, defense firm Lockheed Martin added an additional $200 million to its in-house venture group back in June. Duck-represented insurance firm Aflac just bumped its corporate venture fund from $100 million to $250 million, and Cigna lust launched a $250 million fund of its own. This is to say nothing of financial vehicles like SoftBank’s truly enormous Vision Fund, into which the Japanese telecom giant invested $28 billion of its own capital. And 2018 is on track to set a record for U.S. corporate involvement in venture deals. We come to this conclusion after analyzing corporate venture investment patterns of the top 100 publicly traded, U.S.-based companies (as ranked by market capitalizations at time of writing). The chart below shows that investing activity, broken out by stage, for each year since 2007. A few things stick out in this chart. The number of rounds these big corporations invest in is on track to set a new record in 2018. Keep in mind that there’s a little over one full quarter left in the year. And although the holidays tend to bring a modest slowdown in venture activity over time, there’s probably sufficient momentum to break prior records. The other thing to note is that our subset of corporate investors have, over time, made more investments in seed and early-stage companies. In 2018 to date, seed and early-stage rounds account for over 60 percent of corporate venture deal flow, which may creep up as more rounds get reported. (There’s a documented reporting lag in angel, seed, and Series A deals in particular.) This is in line with the past couple of years. Finally, we can view this chart as a kind of microcosm for blue-chip corporate risk attitudes over the past decade. It’s possible to see the fear and uncertainty of the 2008 financial crisis causing a pullback in risk capital investment. Even though the crisis started in 2008, the stock market didn’t bottom out until 2009. You can see that bottom reflected in the low point of corporate venture investment activity. The economic recovery that followed, bolstered by cheap interest rates that ultimately yielded the slightly bloated and strung-out market for both public and private investors? We’re in the thick of it now. Whereas most traditional venture firms are beholden to their limited partners, that investor base is often spread rather thinly between different pension funds, endowments, funds-of-funds, and high-net-worth family offices. With rare exception, corporate venture firms have just one investor: the corporation itself. More often than not, that results in corporate venture investments being directionally aligned with corporate strategy. But corporations also invest in startups for the same reason garden-variety venture capitalists and angels do: to own a piece of the future. A note on data Our goal here was to develop as full a picture as possible of a corporation’s investing activity, which isn’t as straightforward as it sounds. We started with a somewhat constrained dataset: the top 100 U.S.-based publicly traded companies, ranked by market capitalization at time of writing. We then traversed through each corporation’s network of sub-organizations as represented in Crunchbase data. This allowed us to collect not just the direct investments made by a given corporation, but investments made by its in-house venture funds and other subsidiaries as well. It’s a similar method to what we did when investigating Alphabet’s investing universe. Using Alphabet as an example, we were able to capture its direct investments, plus the investments associated with its sub-organizations, and their sub-organizations in turn. Except instead of doing that for just one company, we did it for a list of 100. This is by no means a perfect approach. It’s possible that corporations have venture arms listed in Crunchbase, but for one reason or another, the venture arm isn’t listed as a sub-organization of its corporate parent. Additionally, since most of the corporations on this list have a global presence despite being based in the United States, it’s likely that some of them make investments in foreign markets that don’t get reported.

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Singapore Blockchain Week happened this past week. While there have been a few announcements from companies, some of the most interesting updates have come from regulators, and specifically, the Monetary Authority of Singapore (MAS). The financial regulator openly discussed its views on cryptocurrency and plans to develop blockchain technology locally. For those who are unfamiliar, Singapore historically has been a financial hub in Southeast Asia, but now has also gradually become the crypto hub of Asia. Compared to the rest of Asia and the rest of the world, the regulators in Singapore are well-informed and more transparent about their views on blockchain and cryptocurrency. While regulatory uncertainties still loom over Korea and Japan, in Southeast Asia, the MAS has already released its opinion “A Guide to Digital Token Offering” that illustrates the application of securities laws to digital token offerings and issuances. Singaporean regulators have arguably been pioneering economic and regulatory standards in Asia since the early days of the country’s founding by Lee Kuan Yew in 1965. Singapore is the first stop for foreign companies in crypto In the past, I’ve said that Thailand is one of the most interesting countries in crypto in Southeast Asia. Nonetheless, for any Western or foreign company looking to establish a footing in Asia, or even for any local company in any Asian country looking to establish a presence outside of their own country, Singapore should be the first stop. It has become the go-to crypto sandbox of Asia. There are a number of companies all over Asia, as well as in the West, that have already made moves into the country. And the types of cryptocurrency projects and exchanges that go to Singapore vary widely. A few months ago, a Korean team called MVL introduced Tada, or the equivalent of “Uber” on the blockchain, in Singapore. Tada is an on-demand car sharing service that utilizes MVL’s technology. The Tada app is built on MVL’s blockchain ecosystem, which is specifically designed to serve the automotive industry, adjacent service industries, and their customers. In this case, MVL was looking to test out its blockchain projects in a progressive, friendly jurisdiction outside of Korea, but still close enough to its headquarters. Singapore fulfilled most of these requirements. Relatedly, Didi, China’s ride-sharing company, has also looked to build out its own blockchain-based ride-sharing program, called VVgo. VVgo’s launch is pending, and its home is intended to be in Toronto, Singapore, Hong Kong or San Francisco. Given Singapore’s geographic proximity and the transparency of its regulators, it would likely be a good testing ground for Didi as well. This week, exchanges such as Binance and Upbit from Korea have also announced their plans to enter the Singaporean market. A few days ago, Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, announced the launch of a fiat currency exchange that will be based in Singapore. He also mentioned his company’s plan to launch five to ten fiat-to-crypto exchanges in the next year, with ideally two per continent. Dunamu, the parent company of South Korea’s largest crypto exchange Upbit, also just announced the launch of Upbit Singapore, which will be fully operational by October. The team at Dunamu mentions how they are encouraged by MAS’s attitude towards cryptocurrency regulation and the vision of the country’s government to establish a strong crypto and blockchain sector. They also believe Singapore could be a bridge between Korea and the global cryptocurrency exchange market. From a high level, the supply of crypto projects and trading volume in Singapore is certainly strong, and the demand also appears abundant. Following China’s ICO ban in late 2017, Singapore has become home to many financial institutions that can serve as potential investors for ICOs. As recently featured on the China Money Network, Li Dongmei wrote that: What is supporting such optimism is the quiet preparation of capital on a massive scale getting ready to act the “All In Crypto” mantra. “In recent months, there have been over a thousand foundations being established in Singapore by Chinese nationals,” said Chen Xianhui, an agent specialized in helping Chinese clients to register foundations in Singapore. Most of these newly established foundations are used setting up various token investments funds. Singapore has become the first choice when crypto companies from both the West and the East are initially scoping out their market strategies in Asia, and companies want an overarching idea of what’s going on in the cryptocurrency world in the region. In fact, it’s often the case that Southeast Asian crypto companies and leaders gather in Singapore before they go off and do crypto businesses in their own countries. It’s the place for one wants to tap all of the Asian crypto markets in one single physical location. The proof is in the data: in 2017, Singapore ascended to the number three market for ICO issuance based on the number of funds raised, trailing the United States and Switzerland. Crypto is thriving due to regulator openness The Monetary Authority of Singapore (MAS) takes a very practical approach to crypto. Currently, MAS divides digital tokens into utility tokens, payments tokens, and securities. In Asia, only Singapore and Thailand currently have such detailed classifications. While speaking at Consensus Singapore this week, Damien Pang, Singapore’s Technology Infrastructure Office under the FinTech & Innovation Group (FTIG), said that “[MAS does] not regulate technology itself but purpose,” when in conversation discussing ICOs in Singapore. “The MAS takes a close look at the characteristics of the tokens, in the past, at the present, and in the future, instead of just the technology built on”. Additionally, Pang mentioned that MAS does not intend to regulate utility tokens. Nevertheless, they are looking to regulate payment tokens that have a store of value and payment properties by passing a service bill by the end of the year. They are also paying attention to any utility or payment tokens with security features (i.e. a promise of future earnings, which will be regulated as such). On the technology front, since 2017, Singapore authorities have been looking to use distributed ledger technology to boost the efficiency of settling cross-bank financial transactions. They believe that blockchain technology offers the potential to make trade finance safer and more efficient. When compared to other Asia crypto hubs like Hong Kong, Seoul, or Shanghai, Singapore can expose one to the Southeast Asia market significantly more. I believe market activity will likely continue to thrive in the region as the country continues to act as the springboard for cryptocurrency companies and investors, and until countries like Korea and Japan establish a clear regulatory stance.

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Fintech promises to be one of the hottest topics at Disrupt Berlin 2018, and you can take that to the bank — see what we did there? On 29-30 November thousands of attendees will descend on Berlin, and what better way to get your fintech business in front of them than to exhibit in Startup Alley? Oh wait, we know a better way — apply to be a TechCrunch Top Pick and exhibit at Disrupt Berlin for FREE! Our highly discerning editors will review every application and choose up to five of the absolute best early-stage fintech startups. Each TC Top Pick receives one free Startup Alley Exhibitor Package along with prime real estate in Startup Alley where they can strut their stuff in front of influential technologists and investors, potential collaborators and customers. It’s an opportunity you can’t afford to miss, so don’t wait — apply before the 28 September deadline. Here’s what you get with a Startup Alley Exhibitor Package. One-day exhibit space Three Disrupt Berlin Founder Passes Access to CrunchMatch (our free investor-to-startup matching platform) Access to the Disrupt press list A chance to be selected as one of the Startup Battlefield Wild Card companies (and you might even compete in our $50,000 startup-pitch competition) Exhibiting in Startup Alley can help you build connections and relationships you might not otherwise make. Consider Zeroqode, a company that exhibited in Startup Alley at Disrupt Berlin 2017. Startup Alley attendees chose Zeroqode as a Wild Card company on day three, which earned them a five-minute interview with TechCrunch editor John Biggs on the Startup Alley Showcase Stage. What’s more, TechCrunch shot that interview and promoted it, along with an article penned by Biggs, across its social media platforms. Here’s what Vlad Larin, the company’s co-founder, had to say about the experience. “Exhibiting in Startup Alley was a massively positive experience. It gave us the chance to show our technology to the world and have meaningful conversations with investors, accelerators, incubators, solo founders and developers. The publicity we received from the on-stage interview brought a lot of people to our website. We had a huge spike in traffic, and we’re still feeling the positive business effects of that interview.” You’ll also have the opportunity to hear some of Europe’s fintech movers and shakers speak from the Main Stage. People like Anne Boden, the founder and CEO of Starling Bank and Ricky Knox, the CEO and co-founder of Tandem Bank. Disrupt Berlin 2018 takes place on 29-30 November. If you want a shot at being one of the fintech TC Top Picks and exhibiting for free in Startup Alley, then apply here before 28 Sept. We can’t wait to see you in Berlin!

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This week Facebook has launched a major new product play, slotting an algorithmic dating service inside its walled garden as if that’s perfectly normal behavior for an ageing social network. Insert your [dad dancing GIF of choice] right here. Facebook getting into dating looks very much like a mid-life crisis — as a veteran social network desperately seeks a new strategy to stay relevant in an age when app users have largely moved on from social network ‘lifecasting’ to more bounded forms of sharing, via private messaging and/or friend groups inside dedicated messaging and sharing apps. The erstwhile Facebook status update has long been usurped by the Snapchat (and now Instagram) Story as the social currency of choice for younger app users. Of course Facebook owns the latter product too, and has mercilessly cloned Stories. But it hardly wants its flagship service to just fade away into the background like the old fart it actually is in Internet age terms. Not if it can reinvigorate the product with a new purpose — and so we arrive at online dating. Facebook — or should that be ‘Datebook’ now?! — is starting its dating experiment in Colombia, as its beta market. But the company clearly has ambitious designs on becoming a major global force in the increasingly popular online dating arena — to challenge dedicated longtime players like eHarmony and OkCupid, as well as the newer breed of more specialized dating startups, such as female-led app, Bumble. Zuckerberg is not trying to compete with online dating behemoth Tinder, though. Which Facebook dismisses as a mere ‘hook up’ app — a sub category it claims it wants nothing to do with. Rather it’s hoping to build something more along the lines of ‘get together with friends of your friends who’re also into soap carving/competitive dog grooming/extreme ironing’ than, for e.g., the raw spank in the face shock of ‘Bang with Friends‘. (The latter being the experimental startup which tried, some six years ago, to combine Facebook and sex — before eventually exiting to a Singapore-based dating app player, Paktor, never to be heard of again. Or, well, not until Facebook decided to get into the dating game and reminded us all how we lol’d about it.) Mark Zuckerberg’s company doesn’t want to get into anything smutty, though. Oh no, no, NO! No sex please, we’re Facebook! Facebook Dating has been carefully positioned to avoid sounding like a sex app. It’s being flogged as a tasteful take on the online dating game, with — for instance — the app explicitly architected not to push existing friends together via suggestive matching (though you’ll just have to hope you don’t end up being algorithmically paired with any exes, which judging by Facebook’s penchant for showing users ‘photo memories’ of past stuff with exes may not pan out so well… ). And no ability to swap photo messages with mutual matches in case, well, something pornographic were to pass through. Facebook is famously no fan of nudes. Unsurprisingly, then, nor is its buttoned up dating app. Only ‘good, old-fashioned wholesome’ text-based chat-up lines (related to ‘good clean pieces of Facebook content’) here please. If you feel moved to text an up-front marriage proposal — feeling 100% confident in Facebook’s data scientists’ prowess in reading the social media tea leaves and plucking your future life partner out of the mix — its algorithms will probably smile on that though. The company’s line is that dating will help fulfil its new mission of encouraging ‘time well spent’ — by helping people forge more meaningful (new) relationships thanks to the power of its network (and the data it sucks out of it). This mission is certainly an upgrade on Facebook’s earlier and baser interest in just trying to connect every human on planet Earth to every other human on planet Earth in some kind of mass data-swinging orgy — regardless of the ethical and/or moral consequences (as Boz memorably penned it), as if it was trying to channel the horror-loving spirit of Pasolini’s Salò. Or, well, a human centipede. But that was then. These days, in its mid teens, Facebook wants to be seen as grown up and a bit worth. So its take on dating looks a lot more ‘marriage material’ than ‘casual encounters’. Though, well, products don’t always pan out how their makers intend. So it might need to screw its courage to the sticking place and hope things don’t go south. From the user perspective, there’s a whole other side here too though. Because given how much baggage inevitably comes with Facebook nowadays, the really burning question is whether any sensible person should be letting Mark Zuckerberg fire cupid’s arrows on their behalf? He famously couldn’t tell malicious Kremlin propaganda from business as usual social networking like latte photos and baby pics — so what makes you think he’s going to be attuned to the subtle nuances of human chemistry?! Here are just a few reasons why we think you should stay as far away from Facebook’s dalliance with dating as you possibly can… It’s yet another cynical data grab Facebook’s ad-targeting business model relies on continuous people tracking to function — which means it needs your data to exist. Simply put: Your privacy is Facebook’s lifeblood. Dating is therefore just a convenient veneer to slap atop another major data grab as Facebook tries to find less icky ways to worm its way back and/or deeper into people’s lives. Connecting singles to nurture ‘meaningful relationships’ is the marketing gloss being slicked over its latest invitation to ask people to forget how much private information they’re handing it. Worse still, dating means Facebook is asking people to share even more intimate and personal information than they might otherwise willingly divulge — again with a company whose business model relies upon tracking everything everyone does, on or offline, within its walled garden or outside it on the wider web, and whether they’re Facebook a user or not. This also comes at a time when users of Facebook’s eponymous social network have been showing signs of Facebook fatigue, and even changing how they use the service after a string of major privacy scandals. So Facebook doing dating also looks intended to function as a fresh distraction — to try to draw attention away from its detractors and prevent any more scales falling away from users’ eyes. The company wants to paper over growing scepticism about ad-targeting business models with algorithmic heart-shaped promises. Yet the real underlying passion here is still Facebook’s burning desire to keep minting money off of your private bits and bytes. Facebook’s history of privacy hostility shows it simply can’t be trusted Facebook also has a very long history of being outright hostile to privacy — including deliberately switching settings to make previously private settings public by default (regulatory intervention has been required to push back against that ratchet) — so its claim, with Dating, to be siloing data in a totally separate bucket, and also that information shared for this service won’t be used to further flesh out user profiles or to target people with ads elsewhere across its empire should be treated with extreme scepticism. Facebook also said WhatsApp users’ data would not be mingled and conjoined with Facebook user data — and, er, look what ended up happening there…!! ————————————————————————————————–> WhatsApp to share user data with Facebook for ad targeting — here’s how to opt out And then there’s Facebook record of letting app developers liberally rip user data out of its platform — including (for years and years) ‘friend data’. Which almost sounded cosy. But Facebook’s friends data API meant that an individual Facebook user could have their data sucked out without even agreeing to a particular app’s ToS themselves. Which is part of the reason why users’ personal information has ended up all over the place — and in all sorts of unusual places. (Facebook not enforcing its own policies, and implementing features that could be systematically abused to suck out user data are among some of the many other reasons.) The long and short history of Facebook and privacy is that information given to it for one purpose has ended up being used for all sorts of other things — things we likely don’t even know the half of. Even Facebook itself doesn’t know which is why it’s engaged in a major historical app audit right now. Yet this very same company now wants you to tell it intimate details about your romantic and sexual preferences? Uhhhh, hold that thought, truly. Facebook already owns the majority of online attention — why pay the company any more mind? Especially as dating singles already have amazingly diverse app choice… In the West there’s pretty much no escape from Facebook Inc. Not if you want to be able to use the social sharing tools your friends are using. Network effects are hugely powerful for that reason, and Facebook owns not just one popular and dominant social network but a whole clutch of them — given it also bought Instagram and WhatsApp (plus some others it bought and just closed, shutting down those alternative options). But online dating, as it currently is, offers a welcome respite from Facebook. It’s arguably also no accident that the Facebook-less zone is so very richly served with startups and services catering to all sorts of types and tastes. There are dating apps for black singles; matchmaking services for Muslims; several for Jewish people; plenty of Christian dating apps; at least one dating service to match ex-pat Asians; another for Chinese-Americans; queer dating apps for women; gay dating apps for men (and of course gay hook up apps too), to name just a few; there’s dating apps that offer games to generate matches; apps that rely on serendipity and location to rub strangers together via missed connections; apps that let you try live video chats with potential matches; and of course no shortage of algorithmic matching dating apps. No singles are lonely for dating apps to try, that’s for sure. So why on earth should humanity cede this very rich, fertile and creative ‘stranger interaction’ space, which caters to singles of all stripes and fancies, to a social network behemoth — just so Facebook can expand its existing monopoly on people’s attention? Why shrink the luxury of choice to give Facebook’s business extra uplift? If Facebook Dating became popular it would inexorably pull attention away from alternatives — perhaps driving consolidation among a myriad of smaller dating players, forcing some to band together to try to achieve greater scale and survive the arrival of the 800lb Facebook gorilla. Some services might feel they have to become a bit less specialized, pushed by market forces to go after a more generic (and thus larger) pool of singles. Others might find they just can’t get enough niche users anymore to self-sustain. The loss of the rich choice in dating apps singles currently enjoy would be a crying shame indeed. Which is as good a reason as any to snub Facebook’s overtures here. Algorithmic dating is both empty promise and cynical attempt to humanize Facebook surveillance Facebook typically counters the charge that because it tracks people to target them with ads its in the surveillance business by claiming people tracking benefits humanity because it can serve you “relevant ads”. Of course that’s a paper thin argument since all display advertising is something no one has chosen to see and therefore is necessarily a distraction from whatever a person was actually engaged with. It’s also an argument that’s come under increasing strain in recent times, given all the major scandals attached to Facebook’s ad platform, whether that’s to do with socially divisive Facebook ads, or malicious political propaganda spread via Facebook, or targeted Facebook ads that discriminate against protected groups, or Facebook ads that are actually just spreading scams. Safe to say, the list of problems attached to its ad targeting enterprise is long and keeps growing. But Facebook’s follow on claim now, with Dating and the data it intends to hold on people for this matchmaking purpose, is it has the algorithmic expertise to turn a creepy habit of tracking everything everyone does into a formula for locating love. So now it’s not just got “relevant” ads to sell you; it’s claiming Facebook surveillance is the special sauce to find your Significant Other! Frankly, this is beyond insidious. (It is also literally a Black Mirror episode — and that’s supposed to be dysfunctional sci-fi.) Facebook is moving into dating because it needs a new way to package and sell its unpleasant practice of people surveillance. It’s hoping to move beyond its attempt at normalizing its business line (i.e. that surveillance is necessary to show ads that people might be marginally more likely to click on) — which has become increasingly problematic as its ad platform has been shown to be causing all sorts of knock-on societal problems — by implying that by letting Facebook creep on you 24/7 it could secure your future happiness because its algorithms are working to track down your perfect other half — among all those 1s and 0s it’s continuously manhandling. Of course this is total bunkum. There’s no algorithmic formula to determine what makes one person click with another (or not). If there was humans would have figured it out long, long ago — and monetized it mercilessly. (And run into all sorts of horrible ethical problems along the way.) Thing is, people aren’t math. Humans cannot be made to neatly sum to the total of their collective parts and interests. Which is why life is a lot more interesting than the stuff you see on Facebook. And also why there’s a near infinite number of dating apps out there, catering to all sorts of people and predilections. Sadly Facebook can’t see that. Or rather it can’t admit it. And so we get nonsense notions of ‘expert’ algorithmic matchmaking and ‘data science’ as the underpinning justification for yet another dating app launch. Sorry but that’s all just marketing. The idea that Facebook’s data scientists are going to turn out to be bullseye hitting cupids is as preposterous as it is ridiculous. Like any matchmaking service there will be combinations thrown up that work and plenty more than do not. But if the price of a random result is ceaseless surveillance the service has a disproportionate cost attached to it — making it both an unfair and an unattractive exchange for the user. And once again people are being encouraged to give up far more than they’re getting in return. If you believe that finding ‘the one’ will be easier if you focus on people with similar interests to you or who are in the same friend group there’s no shortage of existing ‘life avenues’ you can pursue without having to resort to Facebook Dating. (Try joining a club. Or going to your friends’ parties. Or indeed taking your pick from the scores of existing dating apps that already offer interest-based matching.) Equally you could just take a hike up a mountain and meet your future wife at the top (as one couple I know did). Safe to say, there’s no formula to love. And thankfully so. Don’t believe anyone trying to sell you a dating service with the claim their nerdtastic data scientists will hook you up good and proper. Facebook’s chance of working any ‘love magic’ will be as good/poor as the next app-based matchmaking service. Which is to say it will be random. There’s certainly no formula to be distilled beyond connecting ‘available to date’ singles — which dating apps and websites have been doing very well for years and years and years. No Facebook dates necessary. The company has little more to offer the world of online dating than, say, OkCupid, which has scale and already combines the location and stated interests of its users in an attempt to throw up possible clicks. The only extra bit is Facebook’s quasi-bundling of Events into dating, as a potential avenue to try and date in a marginally more informal setting than agreeing to go on an actual date. Though, really, it just sounds like it might be more awkward to organize and pull off. Facebook’s generic approach to dating is also going to offer much less for certain singles who benefit from a more specialized and tailored service (such as a female-focused player like Bumble which has created a service to cater to women’s needs; or, indeed, any of the aforementioned community focused offerings cited above which help people meet other likeminded singles). Facebook appears to believe that size matters in dating. And seems to want to be a generic giant in a market that’s already richly catering to all sorts of different communities. For many singles that catch-all approach is going to earn it a very hard left swipe. Dating takes resource and focus away from problems Facebook should actually be fixing Facebook’s founder made ‘fixing Facebook’ his personal priority this year. Which underlines quite how many issues the company has smashing through its plate. We’re not talking little bug fixes. Facebook has a huge bunch of existentially awful hellholes burning through its platform and punching various human rights in the process. This is not at all trivial. Some really terrible stuff has been going on with its platforms acting as the conduit. Earlier this year, for instance, the UN blasted Facebook saying its platform had became a “beast” in Myanmar — weaponized and used to accelerate ethnic violence against the Rohingya Muslim minority. Facebook has admitted it did not have enough local resource to stop its software being used to amplify ethnic hate and violence in the market. Massacres of Rohingya refuges have been described by human rights organizations as a genocide. And it’s not an isolated instance. In the Philippines the country has recently been plunged into a major human rights crisis — and the government there, which used Facebook to help get elected, has also been using Facebook to savage its critics at the same time as carrying out thousands of urban killings in a bloody so-called ‘war on drugs’. In India, Facebook’s WhatsApp messaging app has been identified as a contributing factor in multiple instances of mob violence and killings — as people have been whipped up by lies spread like lightning via the app. Set against such awful problems — where Facebook’s products are at very least not helping — we now see the company ploughing resource into expanding into a new business area, and expending engineering resource to build a whole new interface and messaging system (the latter to ensure Facebook Dating users can only swap texts, and can’t send photos or videos because that might be a dick pic risk). So it’s a genuine crying shame that Facebook did not pay so much close attention to goings on in Myanmar — where local organizations have long been calling for intelligent limits to be built in to its products to help stop abusive misuse. Yet Facebook only added the option to report conversations in its Messenger app this May.  So the sight of the company expending major effort to launch a dating product at the same time as it stands accused of failing to do enough to prevent its products from being conduits for human rights abuses in multiple markets is ethically uncomfortable, to say the least. Prospective users of Facebook Dating might therefore feel a bit queasy to think that their passing fancies have been prioritized by Zuckerberg & co over and above adding stronger safeguards and guardrails to the various platforms they operate to try to safeguard humans from actual death in other corners of the globe. By getting involved with dating, Facebook is mixing separate social streams Talking of feeling queasy, with Facebook Dating the company is attempting to pull off a tricky balancing act of convincing existing users (many of whom will already be married and/or in a long term relationship) that it’s somehow totally normal to just bolt on a dating layer to something that’s supposed to be a generic social network. All of a sudden a space that’s always been sold — and traded — as a platonic place for people to forge ‘friendships’ is suddenly having sexual opportunity injected into it. Sure, the company is trying to keep these differently oriented desires entirely separate, by making the Dating component an opt-in feature that lurks within Facebook (and where (it says) any activity is siloed and kept off of mainstream Facebook (at least that’s the claim)). But the very existence of Facebook Dating means anyone in a relationship who is already on Facebook is now, on one level, involved with a dating app company. Facebook users may also feel they’re being dangled the opportunity to sign up to online dating on the sly — with the company then committed itself to being the secret-keeping go-between ferrying any flirtatious messages they care to send in a way that would be difficult for their spouse to know about, whether they’re on Facebook or not. How comfortable is Facebook going to be with being a potential aid to adultery? I guess we’ll have to wait and see how that pans out. As noted above, Facebook execs have — in the past — suggested the company is in the business of ‘connecting people, period’. So there’s perhaps a certain twisted logic working away as an undercurrent and driving its impulse to push for ever more human connections. But the company could be at risk of applying its famous “it’s complicated” relationship status to itself with the dating launch — and then raining complicated consequences down upon its users as a result. (As, well, it so often seems to do in the name of expanding its own business.) So instead of ‘don’t mix the streams’, with dating we’re seeing Facebook trying to get away with running entirely opposite types of social interactions in close parallel. What could possibly go wrong?! Or rather what’s to stop someone in the ‘separate’ Facebook dating pool trying to Facebook-stalk a single they come across there who doesn’t responded to their overtures? (Given Facebook dating users are badged with their real Facebook names there could easily be user attempts to ‘cross over’.) And if sentiments from one siloed service spill over into mainstream Facebook things could get very messy indeed — and users could end up being doubly repelled by its service rather than additionally compelled. The risk is Facebook ends up fouling not feathering its own nest by trying to combine dating and social networking. (This less polite phrase also springs to mind.) Who are you hoping to date anyway?! Outside emerging markets Facebook’s growth has stalled. Even social networking’s later stage middle age boom looks tapped out. At the same time today’s teens are not at all hot for Facebook. The youngest web users are more interested in visually engaging social apps. And the company will have its work cut out trying to lure this trend-sensitive youth crowd. Facebook dating will probably sound like a bad joke — or a dad joke — to these kids. Going up the age range a bit, the under ~35s are hardly enamoured with Facebook either. They may still have a profile but also hardly think Facebook is cool. Some will have reduced their usage or even taken a mini break. The days of this age-group using Facebook to flirt with old college classmates are as long gone as sending a joke Facebook poke. Some are deleting their Facebook account entirely — and not looking back. Is this prime dating age-group suddenly likely to fall en masse for Facebook’s love match experiment? It seems doubtful. And it certainly looks like no accident Facebook is debuting Dating outside the US. Emerging markets, which often have young, app-loving populations, probably represent its best chance at bagging the critical mass of singles absolutely required to make any dating product even vaguely interesting. But in its marketing shots for the service Facebook seems to be hoping to attract singles in the late twenties age-range — dating app users who are probably among the ficklest, trickiest people for Facebook to lure with a late-stage, catch-all and, er, cringey proposition. After that, who’s left? Those over 35s who are still actively on Facebook are either going to be married — and thus busy sharing their wedding/baby pics — and not in the market for dating anyway; or if they are single they may be less inclined towards getting involved with online dating vs younger users who are now well accustomed to dating apps. So again, for Facebook, it looks like diminishing returns up here. And of course a dating app is only as interesting and attractive as the people on it. Which might be the most challenging hurdle for Facebook to make a mark on this well-served playing field — given its eponymous network is now neither young nor cool, hip nor happening, and seems to be having more of an identity crisis with each passing year. Perhaps Facebook could carve out a dating niche for itself among middle-age divorcees — by offering to digitally hand-hold them and help get them back into the dating game. (Although there’s zero suggestion that’s what it’s hoping to do with the service it debuted this week.) If Zuckerberg really wants to bag the younger singles he seems most interested in — at least judging by Facebook Dating’s marketing — he might have been better off adding a dating stream to Instagram. I mean, InstaLovegram almost sounds like it could be a thing.

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posted 3 days ago on techcrunch
Renaud Laplanche spent ten years building LendingClub. In the process, he created an industry from scratch. Circumventing conventional banking channels for consumer credit began in 1996 when Chris Larsen started E-LOAN, which ultimately led to Prosper Marketplace. But LendingClub, which Laplanche founded in 2007, was and remains the poster child for the business of marketplace lending. The industry’s short history has been volatile, characterized by both triumphant hype and utter lack of confidence. History of the Marketplace Lending Industry, CB Insights While LendingClub has struggled in the public markets since their late 2014 IPO, they have managed to propel their industry into significance, while rapidly expanding their share of the personal loan market to 10%. After his well-publicized departure in May 2016, Laplanche got started on his next venture in a hurry. Just a few months later he started Credify, ultimately renamed to Upgrade, a company that bears a striking resemblance to LendingClub. In just two years Upgrade has raised $142 million in funding, while originating more than $1 billion in loans since August 2017. With Upgrade, Laplanche has the opportunity to start fresh with the benefit of hindsight. The initial promise of LendingClub and their competitors was unbundling the banks. Now, to persist and grow, marketplace lenders have realized they need to rebundle, providing an array of bank-like services to better serve their end customers. This post explores what Laplanche is doing differently this time with Upgrade. Total Addressable Market ≠ Value Capture There has been a general recognition across many fintech businesses that marketplace business models aren’t enough. The mutually-beneficial arrangement of marketplace lending is a perfect example. Superior customer experience, expedited loan decision, quick receipt of funds, and lower operational costs without legacy infrastructure were the selling points. Charles Moldow famously called it a “trillion-dollar opportunity” in 2014. He may still be right, but in order to realize the opportunity, marketplace lenders need to capture a larger, more regular share of borrower’s attention. Loans may be high-volume purchases, but they’re not high-frequency transactions. So when a platform like LendingClub facilitates a loan so someone can refinance their outstanding credit card debt, is there really a relationship with the customer there? Capital is provided, customer service is available, and monthly payments are made. That’s all there is to it. Total addressable market (TAM) is frequently used to assess opportunity. A critical part of the TAM estimation process might have been overlooked in the early assessments of the alternative lending industry. The large numbers in the figure below reflect an alluring market that LendingClub, Prosper, Avant, Upstart, OneMain, Best Egg and others have attempted to capitalize upon. The notion of a replacement cycle, which I’ll borrow from Michael Mauboussin, is an important consideration here, particularly in a high volume, low frequency transaction relationship such as consumer lending. Just because a borrower refinances their credit card debt with a loan from LendingClub, there’s little guarantee that all of the money spent on acquiring that customer will lead to future transactions with that customer. Yet, in order for these companies to succeed, the average revenue per user (ARPU) is going to have to rise through some combination of repeat customers and complementary services to deepen the relationship and create new revenue channels. The market opportunity for marketplace Lenders, LendingClub Investor Day 2017 With this realization in mind, fintech players across the board have focused on deepening relationships with customers to drive sales and lower SG&A costs. Customer acquisition is a major component of the income statement for these companies. The more engagement a lender has with their end customer, the greater the chance they stand to not only be called upon when a borrower needs to borrow again, but ultimately pinpoint opportunities for product recommendations. And that’s exactly what Upgrade is doing. In many ways, they’re quite similar to LendingClub. Upgrade offers personal loans between $1,000 and $50,000 over three-to-five-year repayment periods at rates competitive with major banks. LendingClub varies a bit in the principal amount offerings and APRs, but they essentially do the same thing. Loans are originated through WebBank, the partner bank that also works with LendingClub. Operationally, there’s a blockchain component for data remediation and security purposes. However, the extent and value of this application are unclear. Marrying Credit with Financial Wellness The notion of financial wellness is increasingly popular among consumer fintech companies, as well as incumbent financial institutions. It reflects a transition away from a purely transactional relationship to a fiduciary one, as we’ve also seen in the wealth management industry. The tricky thing about this is that although it may be the right thing to do, late fees and overdraft penalties make up a sizeable portion of traditional bank revenue. Where Upgrade differs from LendingClub is in their customer engagement model. Upgrade provides several features to customers that resemble a conventional personal financial management (PFM) app. Their Credit Health service offers free advice and monitoring tools, personalized recommendations, and customized updates for individual credit scores and underlying rationale. Additionally, they offer a financial education tool open to the public called Credit Health Insights, which offers tips and tricks for debt management and financial wellness. At the surface, there’s little differentiation here. A free credit score is becoming table stakes for any financial institution, and personalized insights are to be expected. Upgrade’s borrower value proposition, LendIt 2018 Conference In Upgrade’s case, however, the framing of the dual service is compelling. Typically, online lenders only approve 10-15% of applicants. While the credit underwriting models are looking for the most compelling borrower profiles who will pay back their loans, the majority of interested borrowers are sent back to the drawing board. A major focus of Upgrade is to build the credit of the other 85-90% of applicants who are typically rejected so that they improve their profile and obtain a loan in the future. Credit repair and financial wellness are underserved markets today, although companies like Bloom Credit are working to change the record. This product combination helps to unify the interests of Upgrade and borrowers, both approved and rejected. Reinventing Consumer Credit? At the LendIt Conference in 2017, Laplanche concluded his presentation with a reference to the Wright Brothers. He discussed how he was enamored with their ability to combine two things to create something entirely new, which in their case was “wheeling and flying.” A year later, he returned to LendIt with a new product release that borrowed from the innovation strategy of Orville and Wilbur. Upgrade launched a first of its kind product, a Personal Credit Line, a hybrid of a credit card and an unsecured loan. Here’s how it works: customers get approved for up to $50,000 in credit, from which they can draw down as needed. They only pay interest on what’s borrowed, over the course of a 12-60-month timeframe. The interest rate is also fixed over the term of the loan. Upgrade’s Personal Credit Line, a hybrid of a personal loan and a credit card, Upgrade The product is built on the premise that the level of innovation in the origination of consumer credit has been somewhat limited. Laplanche attempted to reinvent it once with the creation of LendingClub. In some ways, it worked. Personal loans originated by fintech lenders account for roughly a third of outstanding consumer loans according to Transunion. Now he’s trying to do it again. First Mover Disadvantage in Consumer Fintech When I first read the press release for the Personal Credit Line, I thought it was a very compelling way to expand the menu of options to qualified consumers. It puts more control in the hands of the borrower, so they can avoid the vicious cycle of consumer debt. I was also reminded of a comment made by Josh Brown, CEO of Ritholtz Wealth Management, after Wealthfront released their “Portfolio Line of Credit” product in April 2017. He said that while it might sound flashy, there’s nothing holding Schwab or Fidelity back from offering the same product tomorrow. What’s so challenging about consumer-facing fintech companies is that customers are expensive to acquire, they’re difficult to keep, and products are easy to replicate. Providing a free credit score is easily accessible through a partnership with Equifax or Experian. It’s commoditized. The situation is similar with personal financial management tools. This Personal Credit Line seems awfully similar. What’s to stop Chase or Goldman’s Marcus from offering an identical product, perhaps with even better rates? U.S. Bank just launched a similar product, albeit for a different use case, called Simple Loan. It’s a $100 to $1,000 loan marketed as a payday lending alternative, with a roughly 20% lower interest rate than typical payday lender offers. There is something to be said for being first to market, but ease of replication limits the defensibility of that position. There is a clear interest in an expansion into new products, which will continue to help Upgrade to differentiate the value proposition to consumers, and maybe one day small businesses. The unfortunate reality is that bigger players with an existing customer base and a lower cost of capital are on their tail. Forget about Democratization Renaud Laplanche rings the bell with his team at LendingClub (DON EMMERT/AFP/Getty Images) The real insight that distinguishes Upgrade from LendingClub is the profile of the users. On the supply side of the marketplace, Upgrade only welcomes institutional investors. LendingClub was, and still is, marketed to individuals and institutions. The peer-to-peer model turned out to be a little too idealistic to serve as the foundation for a business. The concept of a marketplace is really attractive – the ability to invest in others, as cliché as that may sound, has a philanthropic twist to it that even implies a social good. Or, at the very least, an alignment of interests. Except interests aren’t aligned because of the mercurial nature of retail investors, which makes for unstable sources of capital. LendingClub’s original business model, in the pure P2P form, was reliant on the ability to create a new asset class. The notion of investing in consumer credit may sound compelling, and return prospects may be even more appealing. But, you can’t bootstrap an asset class and base a business model around retail adoption. LendingClub had to solve for distribution of their service, as well as the dissemination of the broader concept of unsecured consumer lending as an asset class. On Laplanche’s second go around with Upgrade, there’s no more promise of democratization of a new asset class. Instead, large multi-billion-dollar credit investors own the supply side of the marketplace. As a result, there’s a more stable capital base of institutional investors who know what they’re investing in and the reason why they’re investing in it. What Laplanche did this time around was base his business model around stability. In this market it can pay to be a follower. LendingClub touts the notion that they have “brought a new asset class to investors,” but that education campaign came at a serious cost. It also invited boiler room-like sales behavior from competitors. Upgrade is stepping in after a decade of marketing to scale an untested industry to the masses. Fortunately, a lot of the work has already been done for them. How Different Can You Be? Upgrade is led by as experienced and forward-thinking of a leader as they come in the marketplace lending industry. They expect to originate over $2 billion loans in 2018 and hit profitability by year-end as well. They’re redefining convention when it comes to consumer credit products. The question, however, remains: how long can the novelty last? Consumer fintech is fiercely competitive. It’s also increasingly occupied by incumbents with far lower costs of capital, large existing customer bases, and the ability to experiment in a way that a startup cannot. The unsecured consumer lending space has attracted mountains of capital in the past five years, but the opportunity is clearly defined. The number of lenders issuing more than 10,000 personal loans per year has more than doubled since 2011. There’s a network effect component to marketplace lending businesses, particularly as lenders are able to maintain more connected relationships with consumers. But when it comes to standing apart from the rest of the pack, a differentiated product offering isn’t a very wide moat.

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posted 4 days ago on techcrunch
Lime, the 18-month-old, San Francisco-based company whose bright green bicycles and scooters now dot cities throughout the U.S., launched a pilot program in Tacoma, Washington, today, but that tiny victory might have felt short-lived. The reason: on the opposite side of the country, a Lime rider was killed today by an SUV while tooling around Washington D.C.’s DuPont neighborhood. The local fire department shared video of the rescue, which shows that the victim, an adult male, had to be pulled from the undercarriage of the vehicle. It’s the second known fatality for the company following a death earlier this month in Dallas, when a 24-year-old Texas man fell off the scooter he was riding and died from blunt force injuries to his head. On the one hand, the developments, while unfortunate, can hardly come as a surprise to anyone given how vulnerable riders or e-scooters are. E-scooter use is on the rise, with both Lime and its L.A.-based rival Bird, announcing this week that their customers have now taken north of 10 million rides. At the same time, city after city has deemed their use on sidewalks illegal out of fear that fast-moving riders will collide with and injure pedestrians. That leaves riders sharing city streets with the same types of giant, exhaust-spewing machines that they hope to increasingly displace. In fact, sales of traditional SUVs has continued to surge, thanks in part to low unemployment, high consumer confidence, and American’s enduring love with gigantic vehicles. One solution to the issue, and one for which the e-scooter companies and their investors have been advocating, are protected lanes that would allow e-scooters to be operated more safely. Bird has even publicly offered to help fund new infrastructure that keeps cyclists and scooter riders safer. Another possible answer would appear to be mandating the use of helmets with e-scooters, though California evidently disagrees. On Wednesday, Governor Jerry Brown signed a bill into a law that states Californians riding electric scooters will no longer be required to wear helmets as of January 1. The bill was reportedly sponsored by Bird.

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posted 4 days ago on techcrunch
The coolest mission you haven’t heard of just hit a major milestone: the Japanese Hayabusa 2 probe has reached its destination, the asteroid Ryugu, and just deployed a pair of landers to its surface. Soon it will touch down itself and bring back a sample of Ryugu back to Earth! Are you kidding me? That’s amazing! Hayabusa 2 is, as you might guess, a sequel to the original Hayabusa, which like this one was an asteroid sampling mission. So this whole process isn’t without precedent, though some of you may be surprised that asteroid mining is essentially old hat now. But as you might also guess, the second mission is more advanced than the first. Emboldened by and having learned much from the first mission, Hayabusa 2 packs more equipment and plans a much longer stay at its destination. That destination is an asteroid in an orbit between the Earth and Mars named Ryugu. Ryugu is designated “Type C,” meaning it is thought to have considerable amounts of water and organic materials, making it an exciting target for learning about the possibilities of extraterrestrial life and the history of this (and perhaps other) solar systems. It launched in late 2014 and spent the next several years in a careful approach that would put it in a stable orbit above the asteroid; it finally arrived this summer. And this week it descended to within 55 meters (!) of the surface and dropped off two of four landers it brought with. Here’s what it looked like as it descended towards the asteroid: https://techcrunch.com/wp-content/uploads/2018/09/hayadesc.mp4 These “MINERVA” landers (seen in render form up top) are intended to hop around the surface, with each leap lasting some 15 minutes due to the low gravity there. They’ll take pictures of the surface, test the temperature, and generally investigate wherever they land. Waiting for deployment are one more MINERVA and MASCOT, a newly developed lander that carries more scientific instruments but isn’t as mobile. It’ll look more closely at the magnetic qualities of the asteroid and also non-invasively check the minerals on the surface. The big news will come next year, when Hayabusa 2 itself drops down to the surface with the “small carry-on impactor,” which it will use to create a crater and sample below the surface of Ryugu. This thing is great. It’s basically a giant bullet: a 2-kilogram copper plate mounted in front of an explosive, which when detonated fires the plate towards the target at about two kilometers per second, or somewhere around 4,400 miles per hour. Hayabusa 2’s impactor in a test, blowing through targets and hitting the rubble on the far side of the range. The orbiter will not just observe surface changes from the impact, which will help illuminate the origins of other craters and help indicate the character of the surface, but it will also land and collect the “fresh” exposed substances. All in all it’s a fabulously interesting mission and one that JAXA, Japan’s NASA equivalent, is uniquely qualified to run. You can bet that asteroid mining companies are watching Hayabusa 2 closely, since a few years from now they may be launching their own versions of it.

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posted 4 days ago on techcrunch
From its glass-lined offices in San Francisco’s leafy Presidio national park, six-year-old Mithril Capital Management has happily flown under the radar. Now it’s leaving altogether and relocating its team to Austin, a spot that, among others the firm had considered, has “enough critical mass of a technical culture, an artisanal culture, an artistic culture, and [is] not necessarily looking to Silicon Valley for validation,” says firm cofounder Ajay Royan. The move isn’t a complete surprise. Royan, who cofounded the growth-stage investment firm in 2012 with renowned investor Peter Thiel, hasn’t done much in the way of public relations outside of announcing MIthril’s existence. Thiel and Royan — who’d previously been a managing director at Clarium Capital Management, Thiel’s hedge fund — largely travel in social circles outside of Silicon Valley. The firm has always prided itself on finding startups that don’t fit the typical ideal of a Silicon Valley startup, too. One of its newer bets, for example, is a nine-year-old dental robotics company in Miami, Fla. that says it performs implant surgery faster and more effectively, which is a surprisingly big market. More than 500,000 people now receive implants each year.  “It was a hidden team, because it’s in Miami, and it was a field that was under invested in,” says Royan, noting that one of the few breakthrough companies in the dental world in recent years, Invisalign, which makes an alternative to braces, caters to a much younger demographic. Even still, Mithril’s departure is interesting taken as a data point in a series of them that suggest that Silicon Valley may be losing some of its appeal for a variety of reasons. One of these is so-called groupthink, which had already driven Thiel to make Los Angeles his primary home. An even bigger factor: the unprecedentedly high cost of living. As The Economist reportedly in a recent story about the Bay Area’s narrowing lead over other tech hubs,  a median-priced home in the region costs $940,000, which is four-and-a-half times the American average. “It’s hard to imagine doing another startup in Silicon Valley; I don’t think I would,” said Jeremy Stoppelman, who cofounded the search and reviews site Yelp, took it public in 2012, and continues to lead the San Francisco-based company, to The Economist. Bay Area venture capitalists at TechCrunch’s recent Disrupt event also underscored the possibility that a shift is afoot. Late last week, to learn more about Mithril’s move out of California and to get a general sense of how the firm is faring, we sat down with Royan at the space the firm will formally vacate next year, when its lease expires. We talked for several hours; some outtakes from that conversation, lightly edited for length, follow. TC: You and I haven’t sat down together in years. When did you start thinking about re-locating the firm? AR: In 2016. I started seeing a lot more correlation in the companies that we were seeing; they were looking more similar to each other than before, and the volume was going up as well. So to put that in context, 2017 was our largest volume in the pipeline, meaning the number of companies coming through the system. And it was also the year that we did the least number of investments. We made one investment, in Neocis [the aforementioned dental robotics company]. TC: You don’t think this owes to a lack of imagination by founders but rather serious flaws in the overarching way that startups get funded.  AR: The problem is what I call time horizon compression. So a pension fund is supposed to invest on a 30-year time horizon, but if you look at the internal incentives, the bonuses are paid on an annual basis [and the investors making investing decisions on behalf of that pension] are evaluated every six months or every quarter. So you shouldn’t be surprised when people do really short-term things. There are very short-term versions of investing in the private markets, as well. It’s the 15th AI company, or the 23rd big data company, or the 256th online-to-offline services company. A lot of the people making these investments are very smart. The question is: why are they funding these companies? And why are people starting them? I would suggest it’s because both are under tremendous time pressure, and pressure not to take real risk. If you’re really smart, and you’re told that you’ve got to make returns tomorrow and you can’t take a lot of risk, then you do a me-too company and you look for momentum funding and you try to get out as quickly as possible. It’s a perfectly rational response to bad incentives, and that’s part of what we started to see a lot of in Silicon Valley. I think you have a lot of it going on right now. TC: It feels like the “getting out” part has become a problem. The IPO market has picked up, but it’s not exactly vibrant. Do you buy the argument that going public limits what a team can do because of public shareholder expectations? AR: I think that’s fake. Private investors are maybe even more demanding than public investors, because we have material amounts invested generally. Certainly, we do at Mithril. When it comes to governance at our companies, it’s pretty tough, and we get a lot of insight into their activities. It’s not like a public board, where you get a quarterly meeting and a pretty presentation and then people go home. I do think it’s risk budget and time horizon, bottom line. So the ability to take risks in ways that are not supported by historical models would be: if it goes well, people are happy; if it goes south, the public markets I don’t think will forgive you. TC: What about Amazon, which went out early, lost money for years, was hammered by analysts, yet is now flirting with a $1 trillion market cap?  AR: Amazon is like the sovereign exception that proves the rule. It’s like [Jeff Bezos] was structured to basically not care both in terms of governance, or he cared in the way that was actually constructive to building Amazon, which is, ‘I’m just going to keep reinvesting all my profits into things that I think are important, and you all can just wait,’ right? And not a lot of people have the intestinal fortitude to do that or the governance structure to sustain it. TC: You’ve made some big bets on companies that have been around a while, including the surveillance technology company Palantir, which I recall is one of your biggest bets. How patient are your own investors? AR: Palantir is still doing extremely well as a company. What’s interesting is 80 percent of our capital in [our first of three funds] is concentrated in, like, 10 companies. Our two biggest investments were Palantir and [the antibody discovery platform] Adimab [in New Hampshire], and I’d argue that Adamab is even bigger than Palantir. We actually helped them not go public in 2014 when they were thinking about it. TC: How, and why was it better for the company to stay private?  AR: Adimab was founded in 2007, so it was already seven years old when we encountered them. And I was looking for a company that would be not a drug company but instead [akin to] a technology company in biotech, and Adimab is that. The’ve built a custom-designed yeast whose DNA was redesigned based on the inputs from a multi-year study of about 120 human beings, I think at Harvard, where they assessed the immune responses of the humans to various diseases, then encoded what they understood about the human immune system into the yeast. So the yeast essentially are humanized proxies for the immune system. TC: Which means . . . . AR: You can attack the yeast with disease, and the antibodies the yeast produces are essentially human antibodies. Think of it as a biological computer that responds to disease vectors. We now have a database of 10 billion antibodies that we can use to figure out how best to interrogate the yeast for the next generation of diseases that needed an immunotherapy solution. TC: Is the company profitable? AR: It is. They don’t need any new money. We’ve just begun a program to help them restructure their cap table so they can take out early investors. TC: An 11-year-old company. What about employees who are waiting to cash out? AR: They want more stock, so we’ve created the equivalent of stock options that are tied to value creation. A lot of biotech companies go public very early on. If Adimab had, they would have been under tremendous pressure to actually build a drug company. People would have said, ‘Hey, if you’re discovering all these antibodies and they’re empowering other people’s drugs, why don’t you just make your own drug?” But the founder, Tillman Gerngross, who’s also the head of bioengineering at Dartmouth, he doesn’t want to be in the position of having to sell or be under tremendous pressure [to create a drug company] when he thinks the full impact of what Adimab is building won’t be realized for another decade. TC: In Austin, you’ll be closer to this company and some of your other portfolio companies. But are you really certain you want to leave sunny California? AR: The cost of trying is what I’m worried about [here]. It’s that simple. That applies to people who are starting jobs in someone’s company, or trying to start a company themselves. If it’s expensive for the company to take risk, it’s going be expensive for you to take risk inside the company, which means your career will take a different path than than otherwise After [I was an] undergrad at Yale, New York was a natural place to go, but I never worked there. It just felt like a place that was externally very pressurized. You had to conform to the external pressures that dictated your daily life. Your rent was $4,000 to $6,000 a month for craziness for like a walk-up in Hell’s Kitchen. Social structures were fairly set, like, you had to go to the Hamptons in the summer or something. There were these weird things that felt very dictated and you had to fit and you had to climb the pyramid schemes that people had established for you. Otherwise, you were out. What made [Silicon Valley] really attractive was it was a one giant incubator as a society, with a lot of pay-it-forward forward culture and a low cost of trying. Now I’m worried about all three of those. I’m not saying that just by moving, that gets fixed. That’s facile. But if you conclude that this is an issue that you need to think through, and try to find thoughtful ways to get around, you have to enlist every ally you can. And one of those allies might be reducing unidirectional environmental noise, and having more voices that you can listen to and being exposed to more lived experiences that are varied. . . It builds your capacity for empathy, and I think that’s important for good investing and being a good founder. TC: What are your early impressions of Austin? AJ: It’s a great town. Everyone’s been super friendly. I get to wear my cowboy boots. You can actually do a four-hour tour of food trucks without running out of food trucks. Also, most of the people I’ve met are registered Democrats and like, half of them own really nice guns. And these are not considered contradictory at all.

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posted 4 days ago on techcrunch
In the days leading up to TechCrunch Disrupt SF 2018, The Economist published the cover story, ‘Why Startups Are Leaving Silicon Valley.’ The author outlined reasons why the Valley has “peaked.” Venture capital investors are deploying capital outside the Bay Area more than ever before. High-profile entrepreneurs and investors, Peter Thiel, for example, have left. Rising rents are making it impossible for new blood to make a living, let alone build businesses. And according to a recent survey, 46 percent of Bay Area residents want to get the hell out, an increase from 34 percent two years ago. Needless to say, the future of Silicon Valley was top of mind on stage at Disrupt. “It’s hard to make a difference in San Francisco as a single entrepreneur,” said J.D. Vance, the author of ‘Hillbilly Elegy’ and a managing partner at Revolution’s Rise of the Rest Fund, which backs seed-stage companies based outside Silicon Valley. “It’s not as a hard to make a difference as a successful entrepreneur in Columbus, Ohio.” In conversation with Vance, Revolution CEO Steve Case said he’s noticed a “mega-trend” emerging. Founders from cities like Pittsburgh, Detroit or Portland are opting to stay in their hometowns instead of moving to U.S. innovation hubs like San Francisco. “The sense that you have to be here or you can’t play is going to start diminishing.” “We are seeing the beginnings of a slowing of what has been a brain drain the last 20 years,” Case said. “It’s not just watching where the capital flows, it’s watching where the talent flows. And the sense that you have to be here or you can’t play is going to start diminishing.” J.D. Vance says that most entrepreneurs don't need to move to Silicon Valley. Here's why. #TCDisrupt pic.twitter.com/0mFPeTuHLe — TechCrunch (@TechCrunch) September 6, 2018 Farewell, San Francisco “It’s too expensive to live here,” said Aileen Lee, the founder of seed-stage VC firm Cowboy Ventures, amid a conversation with leading venture capitalists Spark Capital general partner Megan Quinn and Benchmark general partner Sarah Tavel . “I know that there are a lot of people in the Bay Area that are trying to work on that problem and I hope that they are successful,” Lee added. “It’s an amazing place to live and we’ve made it really challenging for people to live here and not worry about making ends meet.” One of Cowboy’s portfolio companies opted to relocate from Silicon Valley to Colorado when it came time to scale their business. That kind of move would’ve historically been seen as a failure. Today, it may be a sign of strong business acumen. Bay Area VCs agree that Silicon Valley may be losing its gravitational pull after all Quinn said that of all 28 of Spark’s growth-stage portfolio companies, Raleigh, North Carolina-based Pendo has the easiest time recruiting folks locally and from the Bay Area. She advises her Bay Area-based late-stage companies to open a second office outside of the Valley where lower-cost talent is available. “We often say go to [flySFO.com], draw a three-hour circle around San Francisco where they have direct flights, find a city that has a university and open up a second office as quickly as possible,” Quinn said. Still, all three firms invest in a lot of companies based in San Francisco. Of Benchmark’s 10 most recent investments, for example, eight were based in SF, according to Crunchbase. “I used to believe really strongly if you wanted to build a multi-billion dollar company you had to be based here,” Tavel said. “I’ve stopped giving that soap speech.” Aileen Lee (Cowboy Ventures), Megan Quinn (Spark Capital), and Sarah Tavel (Benchmark Capital) on whether or not Silicon Valley is on the wane for investors #TCDisrupt pic.twitter.com/SOpn7p0eNQ — TechCrunch (@TechCrunch) September 5, 2018 Underestimated talent A lot of Bay Area VCs have been blind to the droves of tech talent located outside the region. Believe it or not, there are great engineers in America’s small- and medium-sized markets too. At Disrupt, Backstage Capital founder Arlan Hamilton announced the firm would launch an accelerator to further amplify companies led by underestimated founders. The program will have cohorts based in four cities; San Francisco was noticeably absent from that list. Instead, the firm, which invests in underrepresented founders and recently raised a $36 million fund, will work with companies in Philadelphia, Los Angeles, London and one more city, which will be determined by a public vote. Aniyia Williams, the founder of Tinsel and Black & Brown Founders, will spearhead the Philadelphia effort. “For us, it’s about closing that wealth gap to address inequity in tech,” Williams said. “There needs to be more active participation from everyone.” Hamilton added that for her, the tech talent in LA and London is undeniable. “There is a lot of money and a lot of investors … it reminds me of three years ago in Silicon Valley,” Hamilton said. Backstage Capital to launch an accelerator in four cities to promote underrepresented founders Silicon Valley vs. China Silicon Valley’s demise may not be just as a result of increased costs of living or investors overlooking talent in other geographies. It may be because of heightened competition abroad. Doug Leone, an early- and growth-stage investor at Sequoia Capital, said at Disrupt that he’s noticed a very different work ethic in China. Chinese entrepreneurs, he explained, are more ruthless than their American counterparts and they’re putting in a whole lot more hours. Doug Leone of Sequoia Capital says founders in the US and China both want to change the world, but Chinese founders are a little more desperate (and you see it in the crazy work ethic they have).#TCDisrupt pic.twitter.com/dPxsRTbJoq — TechCrunch (@TechCrunch) September 6, 2018 “I’ve had dinner in China until after 10 p.m. and people go to work after 10 p.m.,” Leone recalled. “We don’t see that in the U.S. I’m not saying the U.S. founders oughta do that but those are the differences. They are similar in character. They are similar in dreams. They are similar in how they want to change the world. They are ultra-driven … The Chinese founders have a half other gear because I think they are a little more desperate.” Much of this, however, has been said before and still, somehow, Silicon Valley remained the place to be for investors and startup entrepreneurs. The reality is, those engaged in tech culture are always anxiously awaiting for the bubble to pop, the market to crash and for “peak Valley” to finally arrive. Maybe, just maybe, Silicon Valley is forever. Here’s more of our coverage of Disrupt 2018. Disrupt SF 2018

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Jake Bright Contributor Jake Bright is a writer and author in New York City. He is co-author of The Next Africa. More posts by this contributor African experiments with drone technologies could leapfrog decades of infrastructure neglect Harley-Davidson is opening a Silicon Valley R&D center to power EV production Polestar debuted its first production EV and previewed its electric car line in New York with the CEO squarely taking aim at Tesla. The Volvo subsidiary pulled the cover off its Polestar 1, which it positioned less as a hybrid and more as a fully electric (gas optional) car to attract fence sitters to EVs. The $155,000 auto—that will hit streets in 2019—has 3 electrical motors powered by twin 34kWh battery packs and a turbo and supercharged gas V4 up front (more details here). All electric range is up to 100 miles—which the company claims gives the Polestar 1 the longest all electric range of any production hybrid. Polestar drivetrain The Polestar 1 brings 600 horsepower and 738 ft-lbs of torque. It is the first in a series, with an all electric Polestar 2 to debut in 2019 and a Polestar 3 SUV after that. “Polestar 2 will be a direct competitor to the Tesla Model 3…” CEO Thomas Ingenlath said on the launch stage. He told TechCrunch the company will focus more on creating converts to EVs than pulling away Tesla’s existing market share. Thomas Ingenlath, chief executive officer, Polestar One advantage Ingenlath described was using Polestar 1 as a gateway car for getting laggards to go all electric. “There are many people out there who still think a car has to have a combustion engine,” he said. “Polestar 1 is an extremely good vehicle to get people across that line and once they drive it…understand what an amazing experience an electric car is.” Polestar converts shouldn’t get too attached to that gasoline/voltage combo, however. Polestar 1 will be the company’s first and last electric and gas vehicle, according to Ingenlath. “The future is electric. We will not do a hybrid car again,” he told TechCrunch. At their New York Polestar 1 debut, the company devoted about as much time to the Polestar sales and service experience as the actual car. It will be multi-channel—from app to physical—leveraging parts of Volvo’s dealer network for certain things and staying completely separate for others. For one, Polestar will not have dealers or use Volvo dealers to showcase their cars, according to Ingenlath. The buyer experience will start on the company’s app, then move into what it refers to as a network of “Polestar Spaces” across the U.S., Europe, and China where buyers can view and test cars. Purchased cars can be delivered to one’s home and service coordinated by app and home pickup—though Polestar will use Volvo dealers (not their spaces) on the service end. “We will become a company that produces around a 100,000 cars a year and this will definitely scale-up,” said Ingenlath. “We’ll never become a Volvo, but we certainly need a certain scale to come in to a profitable range.” The company oversubscribed orders for the Polestar 1 with 200 cars coming to North American buyers. While Polestar’s HQ is in Gothenburg, Sweden, it will manufacture cars at a plant in Chengdu China. The company’s EV debut comes as Tesla’s $49,000 to $64,000 Model 3 earned the NHTSA’s top safety rating and Audi introduced it $74,800 all electric e-tron SUV (covered here at TechCrunch) In the U.S. market Tesla still dominates plugin sales by make and model and its Model 3 is expected to boost that lead, according to EV Volumes.

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Twitter said that a “bug” sent user’s private direct messages to third-party developers “who were not authorized to receive them.” The social media giant began warning users Friday of the exposure with a message in the app. “The issue has persisted since May 2017, but we resolved it immediately upon discovering it,” the message said, which was posted on Twitter by a Mashable reporter. “Our investigation into this issue is ongoing, but presently we have no reason to believe that any data sent to unauthorized developers was misused.” Twitter said discovered the exposure on September 10, but took almost two weeks to inform users. Sorry, what ?! My DMs may have been sent to developers for a more than a year?? pic.twitter.com/0ry6pyZIdI — Karissa Bell (@karissabe) September 21, 2018 The company said that the bug affected less than 1 percent of users on Twitter. The company had 335 million users as of its latest earnings release. “If your account was affected by this bug, we will contact you directly through an in-app notice and on twitter.com,” said the advice. “No action is required from you,” the message said. Twitter said in a notice that a developer API used by businesses to interact with customers — like airlines or delivery services — may have collected those particular direct messages by mistake. In a separate blog post, Twitter said that it’s investigation has confirmed “only one set of technical circumstances where this issue could have occurred.” It’s the second data-related bug this year. In May, the company said a bug mistakenly logged users’ passwords in plaintext in an internal log, used by Twitter staff. Twitter urged users to change their password. A Twitter spokesperson did not immediately respond to a request for comment. You should change your Twitter password right now

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Instagram tells me Regramming, or the ability to instantly repost someone else’s feed post to your followers like a retweet, is “not happening”, not being built, and not being tested. And that’s good news for all Instagrammers. The denial comes after it initially issued a “no comment” to The Verge’s Casey Newton, who published that he’d seen screenshots of a native Instagram resharing sent to him by a source. Regramming would be a fundamental shift in how Instagram works, not necessarily in terms of functionality, but in terms of the accepted norms of what and how to post. You could always screenshot, cite the original creator, and post. But the Instagram has always about sharing your window to the world — what you’ve lived and seen. Regramming would legitimize suddenly assuming someone else’s eyes. And the result would be that users couldn’t trust that when they follow someone, that’s whose vision would appear in their feed. Instagram would feel a lot more random and unpredictable. And it’d become more like its big brother Facebook whose News Feed has waned in popularity – Susceptible to viral clickbait bullshit, vulnerable to foreign misinformation campaigns, and worst of all, impersonal. Photographer: Andrew Harrer/Bloomberg via Getty Images Newton’s report suggested a Instagram reposts would appear under the profile picture of the original sharer, and could regrams could be regrammed once more in turn, showing a stack of both profile thumbnails of who previously shared it. That would at least prevent massive chains of reposts turning posts into all-consuming feed bombs. Regramming could certainly widen what appears in your feed, which some might consider more interesting. It could spur growth by creating a much easier way for users to share in feed, especially if they don’t live a glamorous life themself. I can see a case for this being a feature for businesses only, which are already impersonal and act as curators. And Instagram’s algorithm could hide the least engaging regrams. These benefits are why Instagram has internally considered building regramming for years. CEO Kevin Systrom told Wired last year “We debate the re-share thing a lot . . . But really that decision is about keeping your feed focused on the people you know rather than the people you know finding other stuff for you to see. And I think that is more of a testament of our focus on authenticity”. See, right now, Instagram profiles are cohesive. You can easily get a feel for what someone posts and make an educated decision about whether to follow them from a quick glance at their grid. What they share reflects on them, so they’re cautious and deliberate. Everyone is putting on a show for Likes, so maybe it’s not quite ‘authentic’, but at least the content is personal. Regramming would make it impossible to tell what someone would post next, and put your feed at the mercy of their impulses without the requisite accountability. If they regram something lame, ugly, or annoying, it’s the original author who’d be blamed. Instagram already offers a demand release valve in the form of re-sharing posts to your Story as stickers Instagram already has a release valve for demand for regramming in the form of the ability to turn people’s public feed posts into Stickers you can paste into your Story. Launched in May, you can add your commentary, complimenting on dunking on the author. There, regrams are ephemeral, and your followers have to pull them out of their Stories tray rather than having them force fed to them via the feed. Effectively, you can reshare others’ content, but not make it a central facet of Instagram or emblem of your identity. And if you want to just make sure a few friends see something awesome you’ve discovered, you can send them people’s feed posts as Direct messages. Making it much easier to repost to feed instead of sharing something original could turn Instagram into an echo chamber. It’d turn Instagram even more into a popularity contest, with users jockeying for viral distribution and a chance to plug their SoundCloud mixtapes like on Twitter. Personal self-expression would be overshadowed even further by people playing to the peanut gallery. Businesses might get lazy rather than finding their own style. If you want to discover something new and unexpected, there’s a whole Explore page full of it. Newton is a great reporter, and I suspect the screenshots he saw were real, but I think Instagram should have given him the firm denial right away. My guess is that it wanted to give its standard no comment because if it always outright denies inaccurate rumors and speculation, that means journalists can assume they’re right when it does ‘no comment’. But once Newton published his report, backlash quickly mounted about how regramming could ruin Instagram. Rather than leaving users worried, confused, and constantly asking when the feature would launch and how it would work, the company decided to issue firm denials after the fact. It became worth diverging from its PR playbook. Maybe it had already chosen to scrap its regramming prototype, maybe the screenshots were just of an early mock-up never meant to be seriously considered, or maybe it hadn’t actually finalized that decision to abort until the public weighed in against the feature yesterday. In any case, introducing regramming would risk an unforced error. The elemental switch from chronological to the algorithmic feed, while criticized, was critical to Instagram being able to show the best of the massive influx of content. Instagram would eventually break without it. There’s no corresponding urgency fix what ain’t broke when it comes to not allowing regramming. Instagram is already growing like crazy. It just hit a billion monthly users. Stories now has 400 million daily users and that feature is growing six times faster than Snapchat as a whole. The app is utterly dominant in the photo and short video sharing world. Regramming would be an unnecessary gamble. Instagram’s CEO on vindication after 2 years of reinventing Stories

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TC Sessions: AR/VR on October 18 at UCLA is gearing up to be a great show. Early-bird sales end after today, September 21. Don’t miss out on the biggest savings for this event — book your $99 tickets here before prices go up by $100. The stage will feature some of the industry’s most groundbreaking companies and thought leaders from Oculus, Emmy-winning Baobab Studios, Facebook, Survios and more. Why attend TC Sessions: AR/VR? Big Conversations Hear today’s innovators, leaders and experts share their experiences and insights Exclusive Demos Get a first-look at several never-before-seen augmented and virtual technology demos Community Building Meet the key players and contributors in AR/VR throughout the day and expand your network Agenda Highlights: Ditching Headsets for Holograms with Ashley Crowder (VNTANA), Shawn Frayne (Looking Glass Factory) and Brett Jones (Lightform) Augmented reality may be a powerful sight, but it requires participants to own expensive hardware. Is there a workaround? Startups are working to centralize the experience but it’s going to look a lot different. Building Inclusive Worlds with Cyan Banister (Founders Fund) /> If you had the chance to redesign society, where would you even start? As game developers continue designing massive online virtual worlds where we will spend more and more time, how should we look to correct issues we encounter and how can we build a better future? Kickstarting an Industry with Yelena Rachitzky (Oculus) Oculus has pumped hundreds of millions of dollars into funding VR content, and while the headset market is still small, developers have built plenty of games and experiences. Facebook’s VR future rests on people finding new worlds that they want to step into; how will Oculus make this happen? See the full agenda here. Don’t forget to book your early-bird tickets here before end of day today. Students, you can book tickets for just $45 here. P.S. When you tweet your attendance through our ticketing platform, you’ll save an additional 25 percent (for Early Bird) and 15 percent (for student tickets).

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Back in April we saw that eporta, a London-based B2B interiors marketplace startup, had raised $8 million in a Series A funding round led by US investor Canvas Ventures. Eport has digitized the catalogues of furnishing manufacturers and allowed businesses to order direct, cutting out the middle-men. Now London is continuing its obsession with interior decoration startups with the news that Clippings has raised a Series B round of funding, raising $15.4 million. Advance Venture Partners (AVP ) lead the round and existing investor C4Ventures also participated. Founded in 2014 by architecture-trained entrepreneurs Adel Zakout and Tom Mallory, Clippings now plans to grow in the US. Currently, the furniture industry is worth €9.6 billion in Europe, and around $120 billion in the US, but only 6% of this spend is online. Clippings aggregates data on over 7 million products from over a thousand brands to simplify discovery and combines that with interactive mood boards that replace Pinterest to identify and buy a product. Then it throws in collaboration tools for teams, multiple quote requests, orders, invoices and timelines into one place. It now claims to have about 50,000 people – including teams designing for WeWork, Citroën and British Land – using Clippings. Adel Zakout, co-founder and CEO of Clippings told me “We’ve built software that enables full management of an interior project, offer a layer of service and logistics so that when you do buy, we manage it all for you vs Eporta where it’s fully self-serve. This doesn’t fix major pain point of customer.” He also says they have full pricing control, meaning “we can take a view of a whole project value / customer spend and offer optimal prices vs Eporta who can’t do that as the seller controls price.” He says a typical large co-working space project may have a budget in the £100k range and will have products from 40-50 different vendors, “so you need to be able to consolidate pricing, service, logistics and offer tech to manage it all.” Other players in the industry (but not competitors) include Houzz and made.com.

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It’s been a strong year for tech IPOs so far, and it looks like today’s debut of Farfetch — a UK-based shopping site for luxury fashion — is on trend, so to speak. The company opened trading today — on NYSE under the ticker FTCH — at $27, making for a decent pop of 35 percent. The opening followed the company announcing late Thursday evening that it had priced its IPO at $20/share to raise $885 million from the sale of 44,243,749 Class A shares. This was above the expected range of $17 to $19, and gives the company a market cap of $5.8 billion. The stock is now creeping up and is currently at $28.37/share. This is generally a very strong showing for Farfetch, for e-commerce, and also for those who are working in the area of online sales focused not on bargains and the middle-to-lower end of the market, but the higher-priced end aimed at luxury goods — a market that was estimated to be worth $307 billion in 2017 and projected to reach $446 billion by 2025 (according to Bain, and cited in the original IPO filing). Notably, in that filing, the company had put in a provisional marker for raising $100 million, which in the end was much lower than what it raised. At the time it was speculated that Farfetch would reach a valuation of anywhere between $6 billion and $8.37 billion — but it fell short of that. As we have noted before, Farfetch was an early mover in the area of building e-commerce marketplaces specifically catering to the luxury fashion and other luxury goods industries. This end of the market was somewhat slow to embrace digital shopping: the belief was that for higher-end goods, you needed higher-end, more personalised and in-person service at beautiful boutiques. With that backdrop, Farfetch started out by working with boutiques and fashion houses that had yet to establish any kind of online commerce profile of their own. “These sellers have been cautious in their adoption of emerging commerce technologies,” as Farfetch puts it in their IPO filing. By pooling them together, Farfetch was able to create a high-end experience that was bolstered by its scale and reach. In the meantime, the average shopper for luxury goods has come a long way: at the younger end they are digital natives and expect to buy online (some even bypass sites altogether and only do so through messaging platforms), and there are a lot more of them, coming from cities far from fashion centers like London, Paris and New York. They may not always be able to fly instantly to buy pieces, but they can always click a mouse or tap their smartphone screens. (Farfetch’s most recent acquisition and major investment were both out of China to target these specific shoppers.) “Farfetch is the leading technology platform for the global luxury fashion industry,” it notes in the prospectus. “We operate the only truly global luxury digital marketplace at scale, seamlessly connecting brands, retailers and consumers. We are redefining how fashion is bought and sold through technology, data and innovation. We were founded ten years ago, and through significant investments in technology, infrastructure, people and relationships, we have become a trusted partner to luxury brands and retailers alike.” The company has turned into one of the leaders of the turn that the luxury fashion world has made to e-commerce. Farfetch had nearly 1 million (935,772) active consumers as of December 31, 2017, with that figure growing 43.6 percent over the year, making it the world’s largest marketplace for luxury goods. But growth is somewhat slowing: in December 31, 2016, it had 651,674 active consumers, which was up 56.8 percent in the previous year. In terms of its financials, in 2017 Farfetch had revenues of was $386 million, up 59.4 percent versus 2016; and $242.1 million in 2016, up 70.1 percent versus 2015. The company says that it made an operating profit of $136.9 million for the first six months of this year (vs $94.4 million the year before in the same period), but it is also making a net loss (after deducting tax etc.): $68.4 million for the first six months of this year, up from $29.3 million in the same period a year before. Gross merchandise value is growing. GMV in 2017 was $909.8 million, 55.3 percent up on 2016. The previous year it grew 53.4 percent ($585.8 million in 2016). We’ll update this post throughout the day.

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CapitalG, the growth equity arm of Alphabet, has led the $185 million round in Convoy, its first investment in the Seattle-based tech-enabled trucking network. The round brings Convoy’s total raised to $265 million and values the company at $1 billion. New investors T. Rowe Price and Lone Pine Capital participated in the financing alongside existing investors. Convoy has long been backed by Greylock Partners, which led the startup’s Series A in 2015. Y Combinator is also a backer. In an unusual move last year, Y Combinator led a $62 million round in Convoy in what was the first time the accelerator deployed capital from its continuity fund into a late-stage company that was not a YC graduate. Salesforce CEO Marc Benioff, Dropbox CEO Drew Houston, Bezos Expeditions and former Starbucks president Howard Behar are also Convoy investors. Founded by a pair of former Amazonians, Dan Lewis and Grant Goodale, Convoy is trying to transform the $800 billion trucking industry — no easy feat. Dubbed the ‘Uber for trucks,’ Convoy’s app connects truckers with people who need freight moved. With the new funding, it’ll expand nationwide and move beyond just freight matching. “Trucks run empty 40% of the time, and they often sit idle due to inefficient scheduling,” Convoy CEO Dan Lewis said in a statement. “This is a drag on the economy, the environment, and the bottom lines of shippers and carriers alike. Convoy’s ability to serve our shippers and carriers with ground-breaking, innovative technology is already having an impact on these critical problems, and our partnership with CapitalG and other leading investors will accelerate this.” According to GeekWire, Convoy is working on a new suite of tools to help truckers combine tasks so they waste less time. And it’s working to provide shippers access to tracking and pricing data through its platform. As part of the deal, CapitalG partner David Lawee will join Convoy’s board of directors.

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The Trump administration’s new cyber strategy out this week isn’t much more than a stringing together of previously considered ideas. In the 40-page document, the government set out its plans to improve cybersecurity, incentivizing change, and reforming computer hacking laws. Election security about a quarter of a page, second only to “space cybersecurity.” The difference was the tone. Although the document had no mention of “offensive” action against actors and states that attack the US, the imposition of “consequences” was repeated. “Our presidential directive effectively reversed those restraints, effectively enabling offensive cyber-operations through the relevant departments,” said John Bolton, national security advisor, to reporters. “Our hands are not tied as they were in the Obama administration,” said Bolton, throwing shade on the previous government. The big change, beyond the rehashing of old policies and principles, was the tearing up of an Obama-era presidential directive, known as PPD-20, which put restrictions on the government’s cyberweapons. Those classified rules were removed a month ago, the Wall Street Journal reported, described at the time as an “offensive step forward” by an administration official briefed on the plan. In other words, it’ll give the government greater authority to hit back at targets seen as active cyberattackers — like Russia, North Korea, and Iran — all of which have been implicated in cyberattacks against the US in the recent past. Any rhetoric that ramps up the threat of military action or considers use of force — whether in the real world or in cyberspace — is all too often is met with criticism, amid concerns of rising tensions. This time, not everyone hated it. Even ardent critics like Sen. Mark Warner of the Trump administration said the new cyber strategy contained “important and well-established cyber priorities.” The Obama administration was long criticized for being too slow and timid after recent threats — like North Korea’s use of the WannaCry and Russian disinformation campaigns. Some former officials pushed back, saying the obstacle to responding aggressively to a foreign cyberattack was not the policy, but the inability of agencies to deliver a forceful response. Kate Charlet, a former government cyber policy chief, said that policy’s “chest-thumping” rhetoric is forgivable so long as it doesn’t mark an escalation in tactics. “I felt keenly the Department’s frustration over the challenges in taking even reasonable actions to defend itself and the United States in cyberspace,” she said. “I have since worried that the pendulum would swing too far in the other direction, increasing the risk of ill-considered operations, borne more of frustration than sensibility.” Trump’s new cyber strategy, although a change in tone, ratchets up the rhetoric but doesn’t mean the government will suddenly become trigger-happy overnight. While the government now has greater powers to strike back, it may not have to if the policy serves as the deterrent it’s meant to be. Facebook, Twitter: US intelligence could help us more in fighting election interference

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Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines. This week we worked with an (excellent) skeleton crew. Our own Connie Loizos held down the fort with a guest that knew quite a lot: March Capital’s Jamie Montgomery. There was a healthy blizzard of news to get through, so Connie and Jamie plowed ahead. Up top, the Eventbrite IPO was big news. After a long path to going public, Eventbrite reported interesting revenue growth acceleration, attached to a standard set of GAAP net losses. (Standard in that most tech IPOs these days do not feature profitable companies.) But Eventbrite’s IPO was just one thing going on the IPO front. X Financial also went public this week after a somewhat muted pricing event. But even that wasn’t all the IPO news. There was one more tidbit to hang our hat on: NIO’s recent IPO price see-saw. Moving along, Uber may be going on a shopping spree, picking up either Careem (a rival car-sharing service) or Deliveroo (a competing food-delivery service), or both. Or neither! We’ll have to see when all the dust comes to rest. But that wasn’t all! Ro has new capital to spend, bringing more drugs to the male health space. Oh, and UiPath raised a few hundred million as well. And I think that that is it. Thanks for hanging with us over so many dozens and dozens of episodes. We think that you are just great! Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Pocket Casts, Downcast and all the casts.

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23andMe, IBM and now uBiome is the next tech company to jump into the lucrative multi-billion dollar drug discovery market. The company started out with a consumer gut health test to check whether your intestines carry the right kind of bacteria for healthy digestion but has since expanded to include over 250,000 samples for everything from the microbes on your skin to vaginal health — the largest data set in the world for these types of samples, according to the company. Founder Jessica Richman now says there’s a wider opportunity to use this data to create value in therapeutics. To support its new drug discovery efforts, the San Francisco-based startup will be moving its therapeutics unit into new Cambridge, Massachusetts headquarters and appointing former Novartis CEO Joseph Jimenez to the board of directors as well. The company has a healthy pile of cash to help build out that new HQ, too, with a fresh $83 million Series C, lead by OS Fund and in participation with 8VC, Y Combinator, Dentsu Ventures and others. The drug discovery market is slated to be worth nearly $86 billion by 2022, according to BCC Research numbers. New technologies — those that solve logistics issues and shorten the time between research and getting a drug to market in particular — are driving the growth and that’s where uBiome thinks it can get into the game. “This financing allows us to expand our product portfolio, increase our focus on patent assets and further raise our clinical profile, especially as we begin to focus on commercialization of drug discovery and development of our patent assets,” Richman said. Though its unclear at this time which drug maker the company might partner up with, Richman did say there would be plenty to announce later on that front. So far, the company has published over 30 peer-reviewed papers on microbiome research, has entered into research partnerships with the likes of the Center for Disease Control (CDC) and leading research institutions such as Harvard, MIT and Stanford and has previously raised $22 million in funding. The additional VC cash puts the total amount raised to $105 million to date.

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Eight Roads Ventures, the investment arm of financial giant Fidelity International, is moving into Southeast Asia where it sees the potential to plug the later stage investment gap. The firm has funds across the world including the U.S, China and Europe, and it has invested nearly $6 billion in deals over the past decade. The firm has been active lately — it launched a new $375 million fund for Europe and Israeli earlier this year — and now it has opened an office in Singapore, where its managing partner for Asia, Raj Dugar, has relocated to from India. The firm said it plans to make early-growth and growth stage investments of up to $30 million, predominantly around Series B, Series C and Series D deals. The focus of those checks will be startups in the technology, healthcare, consumer and financial services spaces. Already, it has three investments across Southeast Asia — including virtual credit card startup Akulaku, Eywa Pharma and fintech company Silot. There’s a huge amount of optimism around technology and startups in Southeast Asia, where there’s an emerging middle-class and access to the internet is growing. A report from Google and Singapore sovereign fund Temasek forecasted that the region’s ‘online economy’ will grow to reach more than $200 billion. It was estimated to have hit $49.5 billion in 2017, up from $30.8 million the previous year. Despite a growing market, investment has focused on early stages. A number of VC firms have launched newer and larger funds that cover Series B deals — including Openspace Ventures and Golden Gate Ventures — but there remains a gap further down the funding line and Eight Roads could be a firm that can help fill it. “Southeast Asia has several early-stage and late-stage funds that cater well to the start-ups and more mature companies. The growth-stage companies, looking at raising Series B/C/D rounds have had limited access to capital given the lack of global funds operating in the region. We see phenomenal opportunity in this segment, and look forward to helping entrepreneurs as they scale their business, providing access to our global network of expertise and contacts,” Eightroad’s Dugar said in a statement.

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Amazon unleashed a flurry of new products this week at a U.S. press event, but halfway across the world, it is getting deeper into physical retail in the Indian market. The U.S. e-commerce giant is buying up 49 percent of More in a deal that sees Amazon partner and PE firm Samara Capital pick up the remaining 51 percent. Amazon and Samara have created an entity called Witzig Advisory Services Private Limited which will hold the ownership stake through the deal, which is reportedly worth around $585 million according to Indian media. Regulation prevents Amazon from owning the business entirely, hence it requires a local partner to take a majority stake. The deal is significant because it represents a major move for Amazon in brick and mortar retail in India, which is one of the up-and-coming global markets. It did, of course, jumped into offline sales in the U.S. when it gobbled up Whole Foods for some $16 billion last year and this India-based acquisition is similarly strategic. Amazon is battling Flipkart for dominance in India’s e-commerce market, which is tipped to grow four-fold to reach $150 billion by 2022, according to a recent report from PWC. The India rival got a huge boost when it was bought by Walmart, Amazon’s chief rival in the U.S, in a $17 billion deal earlier this year. That acquisition got Walmart into India’s e-commerce space and it also presents an opportunity to go further and move into other emerging markets using Flipkart’s tech and experience, which is something that Walmart has said it is keen to explore. Now, this More deal gives Amazon a strong position in Walmart’s core business — to date, Amazon operates a limited number of fulfilment centers in India. It also comes hot on the heels of another investment which saw Amazon take control of fintech startup Tapzo in a move that boosts its own payment service in India. Walmart confirms $16B Flipkart investment, giving it 77% in India’s e-commerce leader

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Popular ad-blocker AdGuard has forcibly reset all of its users’ passwords after it detected hackers trying to break into accounts. The company said it “detected continuous attempts to login to AdGuard accounts from suspicious IP addresses which belong to various servers across the globe,” in what appeared to be a credential stuffing attack. That’s when hackers take lists of stolen usernames and passwords and try them on other sites. AdGuard said that the hacking attempts were slowed thanks to rate limiting — preventing the attackers from trying too many passwords in one go. But, the effort was “not enough” when the attackers know the passwords, a blog post said. “As a precautionary measure, we have reset passwords to all AdGuard accounts,” said Andrey Meshkov, AdGuard’s co-founder and chief technology officer. AdGuard has more than five million users worldwide, and is one of the most prominent ad-blockers available. Although the company said that some accounts were improperly accessed, there wasn’t a direct breach of its systems. It’s not known how many accounts were affected. An email to Meshkov went unreturned at the time of writing. It’s not clear why attackers targeted AdGuard users, but the company’s response was swift and effective. The company said it now has set stricter password requirements, and connects to Have I Been Pwned, a breach notification database set up by security expert Troy Hunt, to warn users away from previously breached passwords. Hunt’s database is trusted by both the UK and Australian governments, and integrates with several other password managers and identity solutions. AdGuard also said that it will implement two-factor authentication — a far stronger protection against credential stuffing attacks — but that it’s a “next step” as it “physically can’t implement it in one day.”

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When Cleo, the London-based “digital assistant” that wants to replace your banking apps, quietly entered the U.S., the company couldn’t have expected to be an instant hit. Many better-funded British startups have failed to “break America.” However, just four months later, the fintech upstart counts 350,000 users across the pond — claiming more than 600,000 active users in the U.K., U.S. and Canada in total — and says it is adding 30,000 new signups each week. All of which hasn’t gone unnoticed by investors. Already backed by some of the biggest VC names in the London tech scene — including Entrepreneur First, Moonfruit founder Wendy Tan White, Skype founder Niklas Zennström, Wonga founder Errol Damelin, TransferWise founder Taavet Hinrikus and LocalGlobe — Cleo is adding Balderton Capital to the list. The European venture capital firm, which has previously invested in fintech unicorn Revolut and the well-established GoCardless, has led Cleo’s $10 million Series A round, in which I understand most early backers, including Zennström, also followed on. One source told me the Series A gives the hot London startup a post-money valuation of around £30 million (~$39.7m), although Cleo declined to comment. In a call with co-founder and CEO Barney Hussey-Yeo, he explained that the new capital will be used to continue scaling the company, with further international expansion the name of the game. Hussey-Yeo says Cleo will be targeting Western Europe, the Americas and Australasia, aiming to launch in a whopping 22 countries in the next 12 months, as Cleo bids to become the “default interface” for millennials interacting and managing their money. Primarily accessed via Facebook Messenger, the AI-powered chatbot gives insights into your spending across multiple accounts and credit cards, broken down by transaction, category or merchant. In addition, Cleo lets you take a number of actions based on the financial data it has gleaned. You can choose to put money aside for a rainy day or specific goal, send money to your Facebook Messenger contacts, donate to charity, set spending alerts and more. However, in the context of traction and Cleo’s broader global ambitions, it is the decision not to become a bank in its own right that Hussey-Yeo feels is really beginning to bear fruit. His argument has always been that you don’t need to be a bank to become the primary way users interface with their finances, and that without the regulatory and capital burden that becoming a fully licensed bank brings, you can scale much more quickly. I have a feeling that strategy — and its pros and cons — has a long way to play out just yet.

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